Gambling on Liberty

Fixed Odd Betting Terminals (FOBTs) allow punters to bet up to £100 a time in casino games such as roulette. Bookmakers are allowed four terminals in each shop, and there are now around 35,000 of them in the UK. In the latest version of the Diagnostic and Statistical Manual of Mental Disorders (DSM-5) gambling disorder is described in the chapter on substance-disorder and related disorders. It was recently reported that industry-funded research showed that levels of ‘problem gambling’ among those using these machines ran at around 23%.

Many – including a quarter of the local authorities in the UK – are now campaigning for the maximum stake to be limited by law to £2. The reasons given often concern the effects on gamblers themselves, such as loss of employment, difficulties with sleeping, and anxiety. A committed gambler might plausibly claim that these arguments are paternalistic, in that they violate J.S. Mill’s celebrated ‘liberty principle’: ‘The sole end for which mankind are warranted, individually or collectively, in interfering with the liberty of action of action of any of their number, is self-protection’ (On Liberty, ch. 1, para. 9).

But of course FOBTs often cause hardship for people other than the gamblers themselves – in particular, their families. So could limits on stakes be justified to protect their interests?The gambler may respond that we don’t seek to prevent people taking risks in other enjoyable activities which may have seriously detrimental effects on their families, such as dangerous sports or smoking cigarettes. If I’m allowed to race motorbikes at high speed, or smoke 80 Rothmans a day, why should I be prevented from placing £100 bets if that’s what I want to do?

This seems to me a strong point. In general, we are inclined to think that there is a realm of life which, though not strictly ‘private’ in Mill’s terms (because it concerns effects on others), should not be regulated by law, even if the acts thereby permitted are immoral in various ways. But our commitment to this principle is not absolute. Some dangerous sports are not permitted, such as bunjee jumping from Bristol suspension bridge, and this can be justified through the risks that participants pose to those who will have to rescue them if they get into trouble. Further, I suspect that, had tobacco been only recently introduced into the UK, and the facts known about its harmful and addictive properties, its sale probably would have been greatly restricted by law; and again its effects on family members could be used as part of an argument for such restriction.

In the case of dangerous sports, a total ban may not be required. Maybe I can’t bunjee jump from the bridge, but there will be other, safer places where I can. In the same way, if FOBTs were further restricted by law, gamblers would still be able to enjoy betting on them. What they wouldn’t be able to enjoy would be the buzz of extremely high stakes. But I suspect only a few extreme libertarians would advocate no limits (imagine a machine which allowed people to bet up to the value of their house on a single turn of the roulette wheel). So a limit has to be placed at some point, and myself I think something much closer to £2 is a good deal more plausible than the current limit, which allows gamblers to lose thousands of pounds in a matter of minutes.

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7 Responses to Gambling on Liberty

  • Rogue says:

    “But I suspect only a few extreme libertarians would advocate no limits (imagine a machine which allowed people to bet up to the value of their house on a single turn of the roulette wheel)”

    People can currently bet the value of their houses at high stakes online poker tables on a single hand which may last 20 seconds. Not many people seem to be objecting that. You could argue there is a difference but it would be difficult if you consider just the viewpoint of a gambler who wants to quickly bet 400K with around 50-50 odds.

  • Michael Ezra says:

    This all seems about enforcing morals and paternalism. It’s peoples own money and they should be able to do what they want with it without busy bodies interfering.

  • Davide says:

    “Some dangerous sports are not permitted, such as bunjee jumping from Bristol suspension bridge, and this can be justified through the risks that participants pose to those who will have to rescue them if they get into trouble. ” <– one way this objection can be side-stepped is by allowing for a rule where some people are not entitled to rescue attempts – or have to pay their own medical expenses even when these are usually covered by the NHS – when their predicament is an obvious consequence of willful taking non-necessary risks

    Of course, this would be seen as very heartless so it's not exactly realistic. But it MIGHT be philosophically consistent (some would say: horribly so.)

  • Michael Ezra says:

    Davide,

    Yes. Also my earlier comment rests on a similar assumption: no welfare state. Ignoring utility functions and purely looking at expectations, consider someone with £500,000 of assets (a house) who bets it all on a toss of a coin. With no welfare state, his expectation is (0.5×0)+(o.5x £1 million) = £500,000 leaving no financial incentive for tossing the coin. However, consider the same action with a welfare state whereby someone with £500k of assets does not get any welfare but someone with zero gets welfare equivalent to £20k a year in rent subsidies etc. Making further assumptions that over say a five year time scale the house stays the same value and interest rates are zero (for the purposes of a discounted cash flow calculation). The present value of the welfare is £100k. Hence the expectation on a coin toss changes to (o.5 x £100k) +(0.5 x £1 million) = £550k. This means that there is a positive expectation in the coin toss and hence (ignoring utilities) it makes sense to be a big tosser!

    Similar debates can be had with those who argue for the legalisation of drugs saying it should be no concern of the government. Well, they are wrong, if they want a welfare state; if legalisation of heroin led to the NHS having to pick up the tab to pay for rehabilitation programmes then legalisation of drugs is very much a government concern. I am not sure if links work, but I made this point on my blog (I have copied link below – not sure if it appears) on this matter in response to an article on a left wing blog arguing for drug legalisation. My point, which is similar to the point you make about bunjee jumping, is, yes, legalise drugs, but at the same time make it clear that an addict cannot use the NHS for addiction treatment. One should not be able to have it both ways.

    http://undertheoculartree.com/2014/01/11/a-comment-on-drug-legalisation/

  • Michael Ezra says:

    Davide,

    Yes. Also my earlier comment rests on a similar assumption: no welfare state. Ignoring utility functions and purely looking at expectations, consider someone with £500,000 of assets (a house) who bets it all on a toss of a coin. With no welfare state, his expectation is (0.5×0)+(o.5x £1 million) = £500,000 leaving no financial incentive for tossing the coin. However, consider the same action with a welfare state whereby someone with £500k of assets does not get any welfare but someone with zero gets welfare equivalent to £20k a year in rent subsidies etc. Making further assumptions that over say a five year time scale the house stays the same value and interest rates are zero (for the purposes of a discounted cash flow calculation). The present value of the welfare is £100k. Hence the expectation on a coin toss changes to (o.5 x £100k) +(0.5 x £1 million) = £550k. This means that there is a positive expectation in the coin toss and hence (ignoring utilities) it makes sense to be a big tosser!

    Similar debates can be had with those who argue for the legalisation of drugs saying it should be no concern of the government. My point, which is similar to the point you make about bunjee jumping, is, yes, legalise drugs, but at the same time make it clear that an addict cannot use the NHS for addiction treatment. One should not be able to have it both ways.

  • Davide says:

    Michael Ezra:

    It seems we basically agree; though I am not really opposed to the concept of a welfare state.

    In fact, I personally think it might be reasonable to make exceptions to this ‘you did this, you pay for your treatment/rescue’ for minors (but then maybe it’s the parents who should pay?) or people with certified serious psychiatrical problems.
    As long as certification is not of the circular ‘if your behavior caused these unpleasant things for you, you MUST have a serious psychiatrical problem, hence you are not at fault, hence other people should pay for you. kind.

    And by ‘not use the NHS for treatment’, it could instead mean ‘if you use choose to use the NHS rather than private doctors, you will HAVE to pay for it’; granted the pratical difference might be small or not depending on what people think of the private vs public medical sector.

    Since you talk about actual numbers and money – it’s interesting that the OP mentions smoking.
    My understanding is that one of the reason there are generally heavy taxes/tariffs on smoking is because it is a sort of deterrent/prevention measure ( evenf the OP does not acknowledge it as that) which can be justified by economics:

    However arguments could be made that, in the long run, it might SAVE the state money to have people smoking – after all, people who die to lung cancers might do so around the time they would stop working (and start receiving pension payments), it’s not always clear it’s a net money loss.
    So the ‘make smokers pay extra taxes because their cost of their healthcare will be paid by nonsmokers too’ resoning is not necessarily right.

    Similar arguments could be applied to other drugs or activities which tend to cause death much later – which I acknowledge bunjee jumping or gambling do not count as, however.

    Of course, that’s very dependant on the specific national system (not all wellfare states work the same), plus there are considerations such as second hand smoke in some cases.

  • Michael Ezra says:

    Davide,

    Yes, I think we do agree, or at least understand each other. The pure libertarian position of no welfare state might be coherent, but I accept it will be baulked at by many. And this is particularly so with the libertarian position on children and the physically and mentally disabled. And when it comes to drugs, it is a shame I can’t link to it (given the restrictions on this site) but Google Jan Lester’s article for the Libertarian Alliance, “The Pure Joy of Heroin.” The libertarian view being as people have free will, people can simply stop using it:

    Mrs Jackson, wife of the actor Gordon Jackson, told us of her son who had kicked his heroin habit: “I can’t see what all the fuss is about. My son was just having some fun. It’s the fashion these days.” ……
    Heroin is not a disease, it is simply a habit. Heroin users start and stop by choice. If one wants to emphasize that it can be physically addictive one should remember that many addictions are enjoyable and often even widely approved of: tea, chocolate, sport (the chemical effects on the brain of regular vigorous exercise are similar to the effects of taking opiates).

    Re smoking, what is interesting is that the NHS seemed to have upped its efforts to get people to stop people smoking. GPs are directly spending time with patients to assist them in quitting. The argument being that it saves the NHS money in the long run. But that makes it interesting if your point is accurate that it costs the state more money by greater pension costs. It could well be that the pension department of the government and the NHS are independent. Perhaps, if they were together, then there might not be such an emphasis in getting people to quit. It’s food for thought!

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